The Merchant Who Fed His Daughter on Interest

There is the account of a man who used to come to the masjid, admired for being there before everyone else at fajr, and never leaving until ʿIshāʾ was finished — one of the local merchants, a man of good income. His daughter married, and after two or three years of marriage was divorced; her husband, a rich man himself, left her and went overseas, and the daughter, with nowhere else to turn, asked her own father for money. What he did was one of the most despicable things ever witnessed, by a practising Muslim who did not truly understand Islam in his heart: he went to the bank and placed a large sum of money there, the interest on that capital coming to about two thousand or two thousand five hundred dollars — a month, or perhaps every two weeks, it is not entirely certain which. Use this money, he told her, but do not touch the capital; feed your child from it; do not ask me for anything. Each week, go to the bank and collect that interest, and that is your payment — because, he said, he could not let her go to Centrelink and ask for government money, since he was a wealthy man in the community, and were people to speak of it, his reputation would be ruined. So she was to go to the bank each week, collect the interest, and feed her child with it. This is absolutely ḥarām — and the man calls himself a Muslim.

Where does it say this is permitted, in this country or any other? Nowhere. It is ḥarām. Prepared material on the financial system of Islam exists in more academic form, for anyone who wishes to pursue these concepts further than what is fitting to put before a younger audience. A question often put is this: can a Muslim borrow from an Islamic bank, when that bank itself borrows from a larger bank and profits on what it lends — is that not interest also? It is a valid question. A person wanting to buy a house may find what an Islamic bank charges him even higher than a conventional lender, and ask why it should look cheaper to go to a non-Muslim bank instead for a lower rate, when in the end he is paying the same thing, or more. These are concepts many Muslims remain completely confused about, and they need to be understood.